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Estd 4.22.2023
Based on our saas pricing book, Price to Scale, procurement deals tend to involve a certain level of flexibility and negotiation. Here are some key points to consider:
• Payment Terms: As discussed on page 127 of Price to Scale, you'll often encounter negotiations over payment terms. For example, small businesses may negotiate a shift from Net-30 to Net-60 terms in order to better align payments with their cash flow cycles. You should be prepared to offer longer payment windows when needed – or even milestone-based payment options on longer-term deals.
• Customizing Contract Terms: In addition to payment terms, procurement departments may also require cost transparency. While the book does not detail "breaking out costs for compliance reasons" explicitly, it does emphasize the importance of clearly defining every aspect of the service delivery and pricing model (see pages 113 and 125). This means that if a procurement department requests more detailed cost breakdowns to satisfy internal compliance or budgeting protocols, you should be ready to provide them. This not only builds trust but also ensures alignment between your pricing structure and their requirements.
• Flexibility in Service Specifications: The book also points out that procurement discussions can extend to negotiating additional service features or customizations (as in healthcare or financial services examples). Although these negotiations do not strictly involve standard concessions like payment terms, they underscore the importance of being adaptable when meeting the procurement department’s specific needs.
In summary, when engaging with procurement departments, be prepared to adjust your payment terms (for instance, Net-30 to Net-60 or even milestone-based payments) and provide detailed breakdowns of costs if required for compliance purposes. This approach ensures that both sides have clear expectations and that your pricing strategy remains both competitive and aligned with the client’s internal processes.